Business alliances have become an increasingly
powerful weapon in the war to gain and sustain a competitive edge. When two companies
align themselves, their synergistic strengths seem more apparent, their individual
weaknesses somehow less noticeable. Joining forces with another business can give your
company deeper pockets and greater access to new technologies. It can also increase brand
awareness, enlarge your customer base, and enhance your product or service offering. Yet,
in spite of all of these wonderful benefits, if you aren't careful, there can be some
major bumps and pitfalls along the way.

Choosing the right company to partner with can
be as important to your professional life as choosing the right husband or wife is to your
personal life. So how do you know if forming an alliance is right for you? The following
is a step-by-step guide specifically designed to help you understand if your company could
in fact benefit from an alliance and how to make the relationship work, once you have both
said your "I do's."

In today's competitive market, there are many
reasons for forming alliances. Some of the most common include a need for increased cash,
a need to keep up with ever-changing technological advances, a need to find viable
solutions for tough problems, a need to fend off a competitor, and a need to gain market
share  to name a few. Each of these reasons, on its own, is cause enough to form an
alliance.

For as many reasons as there might be for
forming an alliance, there are as many different types of alliances and, of course, an
array of benefits to be reaped from each. Partnerships vary, too, from the extremely
complex relationships between huge corporations to simpler arrangements, where the small
corner store partners with a supplier on a small scale promotion. Likewise, the duration
of business alliances varies from one situation to the next. Some partnerships are formed
on a long term basis while others are for one product, service or project only.

In sniffing around for a potential alliance, you
may find yourself subconsciously disregarding various companies without giving any
consideration to their worth as a partner. In your mind, you don't want to partner with a
small company that has little to offer you, nor are you interested in a really large
corporation that will take away your power and swallow you whole. You may also steer away
from companies or people whose politics and values don't mesh with yours.

Knocking potential alliances off your list
before you even investigate the possibilities, however, is foolish. The rule today is that
you can form an alliance with just about anybody, and that includes even your staunchest
competitors. The following is a list of assorted partnership possibilities, including some
that probably seem very unlikely, but deserve consideration nonetheless:

Suppliers - Forming partnerships with
suppliers is a strategy that's been around for many years. By forming partnerships with
suppliers, you increase your chances of always having the product you want  when you
want it. For example, Walt Disney relied heavily on alliances with suppliers. When
he first built Disneyland, he formed alliances with companies like Coca-Cola and Eastman
Kodak, giving them exclusive rights to sell their goods at the park. It was a decision
neither he nor his financial advisers ever regretted.

A more contemporary example of this is the
extremely successful Bristol Myers and Wal-Mart alliance. When a Wal-Mart store sells a
lot of Bristol Myers' products, company representatives inform the manufacturer, which
sends out replacements within 24 hours. This insures that Wal-Mart's shelves are always
stocked with Bristol Myers' products, whereas other stores may have to wait longer, and
thus disappoint customers and miss potential sales.

Employees -- Odd as it may seem, some
employees make wonderful partners. You may use employees to build stronger relationships
with customers, vendors and distributors, or to perform special projects or promotions. By
offering bonuses or stock options, you can motivate your current staff to take on added
responsibilities, and they in turn will feel more ownership for your organization. And,
best of all, you already have a business relationship with them and they're familiar with
your products, services and goals, so there shouldn't be many surprises in this type of
alliance.

Some companies who have taken advantage of
alliances with employees are 3M, IBM, Sony and Hewlett Packard.

Competitors -- You may consider
competitors to be your enemies, but have you ever imagined the possibilities if your
organizations got together and pooled your resources? Still reluctant to explore the idea?
Take some lessons from giant corporations that are hooking up with rivals and achieving
phenomenal results. Paramount Pictures teamed up with 20th Century Fox to produce the
blockbuster movie "Titanic." Due to the film's exorbitant costs, the picture
probably wouldn't have been made had there not been two major players involved. After the
film won numerous awards and accolades, along with hefty box-office receipts, both
partners were glad they'd made the alliance.

Two other rival companies that have joined
forces are MCI and AT&T. Not only are these two mega-companies lobbying arm in arm for
new telecommunications legislation, they've also banded together to offer customers more
products and services. By pooling their energy and resources, these two companies have
discovered that they can each better meet their customers' needs.

Customers -- Though this is a
liaison that happens much more rarely, you should not overlook a chance to partner
with a customer. They have been on the buying end of the stick and can, most
likely, provide extremely useful information and feedback about your company.

How do you know if forming an alliance is the
right thing to do for your company? Unfortunately, the answer isn't always clear. While
many alliances are hugely successful, there are also those that flop. However, when
examining your own company, if you find yourself lagging behind the market in sales,
growth and/or technological advances, forming an alliance may be your best hope to forge
ahead. Similarly, you might want to look at alliances if you find a close competitor
breathing down your neck.

Once you have decided that an alliance is right
for you, it's important to move slowly and choose the right partner, since choosing the
wrong partner could make your situation deteriorate substantially. The first step is
to find a company you're compatible with. How do you do this? You should be able to obtain
the information you need from the Internet, from annual reports, and by talking directly
with customers and suppliers and the company itself. Remember, you are not only attempting
to determine if the potential partner is financially sound, but also if it shares the same
core values as you do, and if it can fill the holes that you're looking to fill.

The following are some areas to examine
closely before entering into an agreement with any potential partner:

Financial Situation -- You want to be
fairly certain that a company isn't going to face serious financial problems after you
enter into a deal with them. If possible, find out what their annual sales are. How about
their annual growth? How much of their revenue is profit? What are their financial goals,
and more importantly, are these goals compatible with your own?

Operations -- Ideally, you want to find
out how well the company is managed. How many employees does it have? How does this number
compare to last year and the year before? Who are the people in charge? What is their
background and experience?

Market Presence -- You should check to
see where the company does the majority of its business. How much of the market share does
this company control? What are its plans for the future, and do those goals meet yours?
Could you garner a larger collective share of the market if you joined forces?

Quality of Product or Service -- This is
an area you will want to approach with extreme caution. Does a potential partner take
quality as seriously as you do? Do they offer the same warrantees and service hours that
you do? If a company's standards do not live up to your own, cross them off your list
immediately. You have likely built a reputation by providing quality to your customers. If
you tarnish that image through an alliance, you may well lose the customers you have
fought so hard to get.

Views on Customers and Service -- It is
imperative that your potential partner share your views on customers and service. The
easiest way to see exactly where your potential partner stands is by talking directly to
this company's customers and briefly surveying them about your potential partner's
customer service practices. Ask if they are satisfied with the company. Are there any
things they would like to see changed? Does the company deal well with customer
complaints? If they were in your shoes, would they form an alliance with this company?

Marketing -- You will want to see how
your new potential partner markets its product or service. You should find out
specifically how much money is in their budget for marketing and how many people they have
to do the job. Keep in mind, in addition to marketing your products and services, you will
also need to think in terms of marketing the new alliance to the public.

Desire -- This information may be tougher
to obtain, but you'll want to figure out if your potential partner shares your level of
enthusiasm for forming an alliance. If not, this could be a sign of potential problems.

If your new potential partner seems inflexible
on many issues, it should be taken as a sign for you to move on. You may also want to
check into whether or not your potential partner has ever been in an alliance before. If
possible, talk with the company they were aligned with and see what the results were.

Quiz

The following quiz is designed to help
you determine whether or not the alliance you are considering is right for you:

I have checked into and am comfortable
with my potential partner's financial situation.True
False

I know how much my potential partner
makes in annual revenue.True
False

I am aware of the company's annual
growth.True
False

I have a clear understanding of
how the company is organized.True
False

I am familiar with the experience
and background of the company players.True
False

I have carefully assessed the market
presence of this company.True
False

I am familiar with all the markets
in which this company does business.True
False

I feel this is a market that represents
true growth opportunities for my company.True
False

I have closely examined the company's
quality standards.True
False

I believe this company places the
same value on quality that I do.True
False

I have spoken with my potential
partner's customers and obtained valuable feedback.True
False

I have a clear understanding of
how this company handles customer complaints.True
False

I approve of the way this company
markets its product or service.True
False

I agree that this company has both
the money and personnel to effectively market our new alliance.True
False

I believe that this company shares
my enthusiasm to form this alliance.True
False

If you have answered true to at least 12 of the
15 questions, you can be reasonably sure that you are well prepared to enter into an
alliance with your potential partner. Though you should consider all of the factors listed
above, you should give the heaviest weight to those areas that are most important to you
and your company values.

Once the above questions have been answered to
your satisfaction, it's time to get the partnership show on the road. The first thing you
will want to do before approaching another company is to make sure that the deal you are
proposing is equally as beneficial to them as it is for your company. Going to a potential
partner and explaining everything they can do for you but nothing you can do for them will
not entice the company to join forces.

Once you have a potential partner's interest,
discuss all of the details of the alliance  even those you would rather not bring up
for fear of putting your partner off or because you are afraid of the answer. Remember,
it's important that you both lay all of your cards out on the table. In these
situations, it's always best to identify potential issues up front and try to work through
them rather than to wait until you're already involved in an alliance.

Be sure to discuss all possible partnership
opportunities with your potential partner. You will also want to talk about resources and
your plans for turning each opportunity into an advantage. Additionally, you will want to
talk specifically about how you will get your new alliance up and running, and come to
some definitive terms on exactly what needs to happen in order to bring this product or
service to the market. This is also an ideal time to discuss future goals of the alliance,
including future product or service offerings.

Be Sure to Remember

The following is a checklist that should be
formally discussed with a potential partner or alliance before you enter into any
agreement:

What is the business opportunity at hand?_______________________________________________________________________

What are the financial resources and
responsibilities of each company?_______________________________________________________________________

What specific steps need to be taken in order to
get the alliance up and running?_______________________________________________________________________

If you are jointly developing a new product or
service, what specific steps need to be taken in order to get it off the ground?_______________________________________________________________________

Which company will supply which employees to the
project?_______________________________________________________________________

Is this a long-term commitment or an alliance
only for a specific product or service?_______________________________________________________________________

What are the future products or services that
the alliance could potentially produce?_______________________________________________________________________

It stands to reason that you may have issues of
trust, especially if your potential partner is a former competitor. Building trust in such
cases takes time, but there are things you can do to facilitate the process. Probably the
most important step you can take at the beginning is to spend as much time as you can with
your potential partner. Go to business lunches and trade shows together, do a joint
presentation at an industry conference, or call on a customer together.

Then start making small commitments to each
other. Perhaps you agree to divulge a little information about your company and your
partner does the same. In cases where the shared information is sensitive, you may want to
ask each other to sign non-disclosure agreements. This binding agreement should help
put your mind at ease. Note: An attorney should be consulted when drafting or
signing any legal documents.

As with any joint venture, it is extremely
important that you protect yourself legally. It should be pointed out, however, that
alliances are a fairly new proposition  a proposition all lawyers may not be
entirely used to or comfortable with yet. As a result, dickering over the details of the
arrangement can hold up the alliance for weeks. You will want your attorney to take enough
time to protect your company against any liabilities resulting from the alliance, but you
will not want him or her to take so long that you miss out on important time sensitive
opportunities.

The one thing you should insist on is an exit
strategy that allows you to get out of the contract if in fact the alliance doesn't work
out.

You have now reached a critical juncture. You've
found a partner you feel comfortable with, hammered out the legalities and are now
formally in business together. In order to make this alliance a smooth transition for both
companies, you must now figure out specifically how to make the marriage work. Keep in
mind, however, that you are not forming an alliance between two people, but rather two
entire companies. In this situation, it's guaranteed that there will be issues that need
to be dealt with  especially when each partner feels like they are the ones
rightfully in charge. You may want to sit down ahead of time with your potential partner
and discuss your mutual expectations and an acceptable division of duties.

Openly express your expectations up front. By
holding back, the only thing you build up is resentment down the line. Outline your goals
and objectives in writing so you will have a benchmark to use later to measure whether the
alliance is working. Keep lines of communications open every step of the way and meet
regularly to discuss what aspects of the alliance are working for both of you and what you
would like to see changed. Make sure that each of you knows how to get in touch with your
alliance partner at all times, in case urgent matters arise.

In order to keep the alliance working, it's
imperative that you keep it balanced. The moment one partner starts to feel like the other
isn't pulling their weight or, at the opposite end of the spectrum, is being too
domineering, problems will arise.

You will also want to discuss money matters up
front  who will invest what, as well as to how you will divide the profits and
spread out your various personnel. Customer focus will also be a key during this period.
How will you get the word out to your customers?

It is important to remember that your companies
are now "married" in some ways, and thus you may not enjoy all of the freedoms
that you did before the alliance. It used to be that you were the sole person in charge.
Now you have a partner you must answer to  someone who may rightfully question your
decisions and judgments.

Self-Assessment

The following questions are designed
to help guide you through the beginning of a new alliance:

Have we clearly defined which duties
will be assigned to which parties?Yes
No

Have I openly expressed my expectations
for the alliance?Yes
No

Have I put my expectations in writing?Yes
No

Have we established clear lines
of communication?Yes
No

Have we talked through all money
matters?Yes
No

Do we have a clear plan for dealing
with customer service issues?Yes
No

Your alliance has been up and running for a
short time now, but somehow, you find that it isn't working the way you'd planned. For
whatever reason, this isn't the business arrangement that you envisioned. What should you
do? The first thing to consider is whether at least some of the problems could be your
fault. Many companies make mistakes when entering into alliances and rather than recognize
them and try to fix them, they let the relationship sour until it is virtually beyond
repair.

Next, ask yourself whether you have been
withholding information. A common mistake is for one or both of the alliance partners to
continue to secretly view each other as the enemy. Therefore, they tend to keep secrets
and avoid revealing too much to their partner. The bottom line is, you are now partners.
If your relationship isn't based on trust, you shouldn't be in a business relationship
together.

Next, consider whether your expectations about
the alliance were unreasonable. Were you expecting results too quickly? Did you anticipate
higher financial returns than were possible given your resources?

Also ask yourself whether you're treating
and respecting the other person as an equal. Is it possible that you still view yourself
as the boss, making unreasonable demands or your partner?

By talking with your partner, you can get a good
idea of whether it's time to end the relationship or not. It may be worth it to try to
come to some agreement on how to work better together before deciding to end an alliance.

Self-Assessment

Before giving up on an alliance, ask
yourself the following questions:

Do I trust my new partner?Yes
No

Is it possible I am withholding
information?Yes
No

Am I disappointed things aren't
moving quicker?Yes
No

Do I treat my partner as an equal?Yes
No

Are there actions that I can take
to improve the relationship?Yes
No

Are there actions we can take together
to achieve better results?Yes
No

If you have tried to overcome all of the above
issues, but the alliance still is not working, you may want to ask your lawyer to execute
the exit strategy to get you out of the agreement. However, this action should be taken
only as a last resort.

The majority of business alliances work out to
both partners' advantage. It's well worth your company's time and resources to do whatever
you can to make the relationship work. The synergy that a business alliance provides can
supply your company with increased revenues, improved brand awareness, and higher market
share for many years to come.

Almost every high-tech company is going the
alliance route these days. One company that knows firsthand the huge benefits that can be
reaped from forming alliances is PeopleSoft. PeopleSoft is a leading enterprise software
company located in Pleasanton, Calif. PeopleSoft's products help firms manage everything
from accounting to human resources management more effectively.

In analyzing their growing customer base,
PeopleSoft's management team recognized early on that each of their customers was unique,
and each had slightly different needs. PeopleSoft also realized that it would be
impossible for one company to properly address all of those individual needs on their
own. Not only were they short on the necessary personnel, but they also lacked other
important resources including  in some cases  expertise. So, to best serve all
of their customers, PeopleSoft began to form alliances.

A prime example of the benefits PeopleSoft has
gained from this strategy is their alliance with IBM's HR Access International Payroll.
This alliance focuses on meeting the payroll and human resource strategies of
multinational companies. It gives customers of both companies an expanded network of
consulting services to help them best address the problems of human resource management on
an international level. Additionally, IBM's HR Access brings an installed base of more
than more than 1,100 customers in 40 countries.

PeopleSoft formed another important alliance
with The Bombay Company, a Fort Worth, Texas-based retailer specializing in classic and
traditional home accessories. In 1997, with more than 4,000 employees and annual sales of
$332 million, The Bombay Company needed a comprehensive HR services strategy to support
its more than 400 stores in 42 states and Canada. The Bombay Company's HR department was
not equipped to support these initiatives. Neither its existing HR system, which was not
Y2K compliant, nor the outsourced payroll service met to the company's reporting or
data-tracking needs.

In November 1997, The Bombay Company chose a
company called The Hunter Group to develop an innovative set of solutions, including
support for employee self-service and automated workflow for HR transactions. These
solutions minimized the time spent on HR processes by store managers, and enterprise-wide
linkages from loss prevention and point-of-sale processes into payroll. This unique
solution enabled the client to create incentive bonuses based on quantifiable performance,
at any level within the operation.

The Bombay Company needed a leading HR
management system and a premier payroll service provider that was accurate and customer
service oriented. They chose the PeopleSoft HRMS application suite for its strong
reporting capability and ability to integrate with core business systems.

Working through an alliance, The Hunter Group
provided rapid implementation assistance and training for the PeopleSoft system. In a
short, 11-month period, the new strategy was implemented and both of the new HR and
payroll management systems were live.

In 1999, the Bombay Company had more than 5,000
employees and reported annual sales of $356 million.

These are just two of the more than 150
successful alliances PeopleSoft has formed. Other partners include Digital, Microsoft,
Lotus and Hewlett-Packard. PeopleSoft currently employs 6,900 people and had revenues of
$1.4 billion in 1999. A recent survey revealed their customer approval rating to be 98
percent. PeopleSoft openly attributes this success to their alliance oriented growth
strategy.